BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
QUESTIONS AND ANSWERS FROM DEEP DIVE INTO INSPECTIONS AND DISCLOSURES, PART II
On August 3, 2026, Broker Risk Management held a webinar entitled “A Deep Dive Into Inspections and Disclosures, Part II.” The following are questions and answers arising out of that webinar:
QUESTION NO. 1: If the agent does not have documentation in their possession regarding a material issue or defect, is the agent required to disclose it?
RESPONSE: Yes, absolutely. Agents are required to disclose all material issues and defects affecting the property of which they are aware, whether documentation exists or not. If there is no documentation, the agent should identify the source of the information. For example, if a neighbor attends an open house and states that a sex offender lives in the neighborhood, the agent is required to disclose that. However, the agent should disclose it as follows: “Neighbor reports that a sex offender lives in the neighborhood. Agent has not verified that fact. Buyer should investigate.” You should not investigate the veracity of this statement, simply disclose it. However, the agent should discuss the neighbor’s statement with the seller. The seller may want to address the seller’s disclosures to include that fact, assuming the seller has knowledge of it.
QUESTION NO. 2: Does the Agent Visual Inspection Disclosure (AVID) satisfy the requirement of Civil Code §2079, which requires an agent to undertake a reasonable visual inspection and disclose all material defects which the agent identifies.
RESPONSE: Yes, that is the purpose of the AVID – to satisfy the requirements of 2079.
QUESTION NO. 3: If an agent identifies a noticeable red flag and discloses it on the agent’s AVID, is the other agent obligated to disclose the same defect?
RESPONSE: No. An agent’s visual inspection is based on their personal observations. Agent’s disclosures are not based on other parties’ observations. For example, an agent is not required to disclose information the home inspector identifies nor defects the other agent identifies, unless that agent has additional information or pertinent details in addition to the other agent’s disclosure, in which case that new information must be disclosed.
QUESTION NO. 4: Should agents (whether listing agents for presale or buyer’s agents for purchase) attend inspections?
RESPONSE: That is a business choice of the agent. However, it is a good practice as the agent will learn more about the property to ensure that all defects and material issues are disclosed.
QUESTION NO. 5: In identifying a red flag, how far do we go? For example, some might consider the issue to be minor while others consider it to be major.
RESPONSE: Disclose all material issues and defects you identify, no matter how minor or major you consider them to be. A defect you may consider is minor or insignificant may be major for a buyer. If you have to ask the question whether to disclose, the answer will almost always be Yes. If in doubt, discuss with your manager or broker.
QUESTION NO. 6: What do we tell clients who insist on relying on AI to review disclosure documents and specifically HOA documents?
RESPONSE: You should advise the clients in writing of the importance of personally reviewing every document and every disclosure and not to rely on an AI summary. The AI algorithm has not seen the property nor is it familiar with it. Attach a copy of the Buyer Advisory to remind the buyer of the buyer’s obligations to thoroughly investigate the property.
QUESTION NO. 7: If the Natural Hazard Disclosure Statement states that a property is not in a “high or very high fire hazard severity zone,” does the Fire Hardening Disclosure Statement form (FHDS) need to be completed by the seller?
RESPONSE: No, an FHDS only needs to be completed if the property (1) is in such fire hazard zone, (2) is a residential 1-4 property, and (3) seller is required to complete a TDS. Further, seller does not have to complete paragraph 2 (Fire Hardening) if the improvements on the property were constructed after January 1, 2010. (See Paragraph 1 of the FHDS for details.)
QUESTION NO. 8: Can a buyer request that the seller pay their attorney fees if legal issues including litigation arise relating to the property?
RESPONSE: Yes, the CAR Residential Purchase Agreement, and virtually all standard form real estate purchase agreements, contain an attorney’s fee provision stating that the prevailing party in any lawsuit arising out of that contract or the sale of the property, including non-disclosures, may recover reasonable attorney’s fees.
QUESTION NO. 9: What are the best practices regarding sellers completing disclosures through Glide?
RESPONSE: Glide is a program offered through the California Association of Realtors to assist sellers in completing disclosures. While BRM supports CAR and CAR’s activities, BRM has concerns about a seller’s sole use of Glide to complete disclosures. While Glide is a useful tool in ensuring that the sellers answer every question, Glide cannot ensure the accuracy of the disclosures nor can it ensure that the seller’s explanations of disclosures are thorough, comprehensible, and complete. If Glide is used, the sellers should doublecheck and verify the veracity of their statements and their disclosures. Seller’s agents should always review seller’s disclosures to assure that all questions have been answered, and all “yes” answers have an explanation.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry but rather are intended to suggest good risk management practice.